|ENERGY ADVICE LINE QUARTERLY REVIEW
April 26 2013.
Business electricity prices have spiraled by more than 11% on average in the past 12 months, according to figures released by the Energy Advice Line.
Firms that signed up to 1, 2 and 3-year energy contracts in the first quarter of 2012 paid an average 9.98p/kWh for electricity, compared to 11.12p/kWh during the same period in 2013.
According to Julian Morgan, managing director of the price comparison, switching and advice service for business energy consumers, said that firms should now consider longer-term contracts because energy prices were set to rise further.
The Energy Advice Line's Quarterly Review of energy prices shows that firms that signed up to 1-year energy contracts at the beginning of 2012 were hardest hit by the price rises.
A year ago, electricity tariffs under a 1-year contract cost an average 9.56p/kWh. By the time the contracts expired in the first quarter of 2013, prices had risen to 10.99p/kWh - an increase of almost 15%.
In contrast, businesses that signed up to 3-year deals at the start of 2012 would have paid slightly more for their energy at the start of the contract - 10.58p/kWh. However, these firms will now be paying less than average today and the low tariffs are locked in for a further 2 years.
"Firms that signed up to the shortest-term deals a year ago would have been financially better off signing up to a more expensive 3-year year deal, " Mr Morgan said.
"Businesses would have paid a premium for a 3-year contract but because prices have risen so substantially, they are now better off.
"This is not about the benefit of hindsight. These figures illustrate very clearly that it's well worth considering all available options when looking to sign up to a new energy deal.
"Energy prices are likely to continue to rise so locking in today's prices is probably a good idea."
However, the Energy Advice Line's review found that most UK firms - 87% - continue to opt for the cheapest short-term deals.
"With tough economic conditions continuing to bite and drive profit margins down, businesses seem to be grabbing the cheapest deals possible and that means short-term contracts," Mr Morgan said.
"However, our advice continues to be that they should not disregard the longer-term options. Taking a short-term view in a market where prices are rising could be the wrong decision."
The Energy Advice Line is the UK's leading energy price comparison and switching service exclusively for business, and enables firms to compare the market for the best possible business energy deals within minutes.
The free service is backed by a team of business energy experts who provide a complete contract management service including advice about business energy contracts, how to avoid expensive rollover contracts and a renewal reminder service.
The Energy Advice Line also campaigns for a better deal for business energy users from suppliers and has lobbied the government and energy regulator Ofgem for greater protection from practices such as cold calling.
For further information visit www.energyadviceline.org.uk
To view the infographic chart detailing the rise CLICK HERE